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Legal Professional Privilege

June 22, 2016

Legal Professional Privilege (LPP) allows a client to consult a lawyer in confidence without fear of having to disclose communications between them at a later date.  It exists for the benefit of the client not the legal advisor and the privilege is absolute unless the advice was received to enable a crime to be committed.  It entitles a party in litigation to withhold documents from the other party and in certain circumstances can be utilised to prevent regulators from accessing specific documents. 

 

The extent of privilege

 

A client can include an individual, partnership or a company through the directors.  Legal advisers are confined to counsel, solicitors and foreign lawyers, who are professionally qualified and members of professional bodies.  Privilege applies to the advice provided by both external and in-house lawyers when they act in their capacity as lawyers but not in an executive capacity.  Privilege extends to employees of law firms such as trainees and legal executives provided that they are supervised by qualified lawyers.  Privilege does not extend to other professionals providing legal advice such as accountants.

 

The rule of privilege is applied in the courts of England and Wales even if the advice relates to the law of a foreign jurisdiction and in circumstances where the advice is given or received within the jurisdiction by an English or foreign-based lawyer to an English or foreign-based client.  Privilege continues indefinitely, unless the privilege is lost or waived.  If the client dies, privilege vests in his heirs and personal representatives. 

 

The two strands of privilege

 

Litigation Privilege

 

Litigation Privilege (LP) relates to communications and documents brought into existence for litigation or contemplated litigation.  Litigation is limited to adversarial proceedings and therefore excludes, for example, internal grievance and disciplinary proceedings and fact finding inquiries and investigations. The communications must be between a lawyer and the client or a third party, or between the client and a third party.  For the communications to benefit from LP the dominant purpose behind the creation of the documents must have been for use in litigation. 

 

 

In the case of Waugh v British Railways Board [1979] UKHL 2, a report was prepared by the British Railways Board on the death of one of its employees.  The report was prepared for two purposes, firstly to establish the cause of the accident so that appropriate safety measures could be taken and secondly to enable the defendant’s solicitors to advise on potential litigation.  The court ordered the British Railways Board to disclose the report to the claimant as anticipated litigation was not the dominant purpose for which it was prepared. 

 

 

 

Legal Advice Privilege

 

Legal Advice Privilege (LAP) applies to confidential communications between a lawyer and a client provided that the sole or dominant purpose is to obtain legal advice even where no proceedings are contemplated.  This privilege does not extend to communications with third parties.  LAP relates to any advice as to what should prudently and sensibly be done in the relevant legal context.  This includes presentational, commercial and strategic advice, if it relates to the client’s legal rights and liabilities.

 

In the 2003 Court of Appeal case Three Rivers (No 5) it was considered that the definition of client for LAP purposes only extended to those individuals specifically tasked with obtaining legal advice from lawyers (the “client team”).  Therefore, communications between the lawyers and employees outside the client team, and also communications between the client team and employees outside the client team, are generally not protected by LAP.  Accordingly, when advising large corporates or organisations, it is important to ascertain the identity of the “client team” in the organisation for the purposes of LAP. 

 

Other heads of privilege

 

Common interest privilege

 

Common interest privilege (CIP) arises where a person voluntarily discloses a privileged document to a third party who has a common interest in the subject matter of the privileged document or in litigation in connection with which the document was brought into existence.  The common interest must exist at the time of disclosure to the recipient, but it is not clear that it necessarily has to have existed at the time when the documents were created.  Where CIP applies, the document remains privileged in the hands of the recipient.  The recipient can assert the disclosing party's privilege as against the world.  Examples of relationships where CIP has been established include: co-defendants, insured and insurer, companies in the same group and agent and principal.

 

Joint privilege

 

Joint privilege (JP) applies to situations where two parties retain the same solicitor or where two parties have a joint interest in the subject matter of a privileged communication.  To receive the benefit of JP the parties must share the joint interest at the time the communication was created. Unlike CIP the holders of the JP must concur to waive it. 

 

Loss of privilege and situations where privilege does not exist

 

Disclosure

 

Privilege can be waived by the holder of the privilege or lost where a party inadvertently allows a privileged document to be inspected.  If a document is disclosed to a third party, it may remain privileged so long as it is not properly available for use.  It is not possible to claim that a document disclosed to a third party is privileged against that third party.  A discussion of the court’s discretion to restrain the use of privileged documents that have been disclosed is contained in the case of Imerman v Tchenguiz [2010] EWCA Civ 908.  The starting point is that LPP entitles a party to refuse to produce documents to which LPP attaches.  Once a document has been disclosed privilege in the document is lost.  However, where documents have been disclosed in circumstances where there has been a breach of confidence, the court can use its equitable jurisdiction to order delivery up of the documents.  The court may take various public interest factors into consideration when deciding whether the documents should be admitted in the proceedings.  Usually the emergence of the truth is not a sufficient factor to allow admission of privileged documents as the balance between privilege and the truth has been struck in favour of LPP.  However, the court may decide that documents should be admitted in circumstances where the material relates to misconduct of such a nature that it is in the public interest for it to be disclosed to others. 

 

The principles summarised in Imerman v Tchenguiz were recently considered in the case of Lachaux v Independent Print Ltd & Evening Standard Ltd [2015] EWHC QB, a libel case where the claimant’s former wife had sent the claimant’s privileged documents to the defendants.  The defendants wished to use these documents in the libel proceedings as they contended that it was impossible to reconcile the contents of the documents with a witness statement that the claimant had previously made in the course of the proceedings. The claimant’s former wife believed that the privileged documents had been sent to the FCO, the UN Rapporteur and various media organisations.  However, the judge decided that the documents remained confidential (retaining LPP) despite disclosures by the claimant’s wife to third parties.  Also, the judge was not satisfied that the claimant had lied or had been threatening to advance a factual case that he knew to be false.

 

 

Waiving privilege in favourable documents

 

The client may wish to waive privilege where it would assist his case.  However, care should be taken if the document disclosed is part of a larger document or one of a sequence of documents as the court may order that the whole document or all the documents in the class are disclosed.  Privilege is waived in circumstances where privileged information is placed before the court.

 

The crime-fraud exception

 

Where a person consults a solicitor in the furtherance of a criminal purpose communications between the client and that solicitor do not attract privilege, this is known as the “the crime-fraud exception”.  It applies whether or not the solicitor knows of his client's criminal purpose.  Despite the name, this principle is not restricted to abuse of the client/solicitor relationship for criminal ends, but also extends to civil fraud or other similar underhand conduct, which is a breach of good faith, or contrary to public policy or the interests of justice.

 

Waiving privilege to rely on a defence to a criminal charge

 

In certain circumstances, it may be beneficial to waive privilege over documents.  The Serious Fraud Organisation (SFO) has advised that prosecution may be avoided where a company provides information to the SFO including making witnesses available and disclosing details of any internal investigation into the operation of the corporate body.  In relation to Cartel offences, the Enterprise and Regulatory Reform Act 2013 provides that the person concerned will have a defence where they can show that they took reasonable steps to ensure that the nature of the arrangements were disclosed to professional legal advisers for the purposes of obtaining advice about them before their making or implementation.    

 

Retaining privilege

 

Regulatory investigations

 

Corporate clients need to be especially careful in situations where they are receiving legal advice from internal or external lawyers in respect of a regulatory investigation.  If it is clear that the investigation signifies pending proceedings the client may be able to rely on LP to protect its communications with its lawyers.  However, if prospective proceedings are not the dominant purpose of those communications, or if the proceedings are not classified as adversarial, the client may need to rely on LAP to prevent disclosure.  In these circumstances, it is advisable that the client decides from the start which individuals in the company constitute the “client” for the purpose of receiving legal advice.  If the group appears to be artificially large the court may decide that not all of the members of the “client” are genuine.  On the other hand, fewer documents will be protected if the group is very small.

 

Dissemination of advice within the organisation

 

Due to the restrictive interpretation of the client for the purposes of LAP in the Three Rivers (No 5) case the disclosure of advice from the recipient to others in the organisation should be made subject to appropriate confidentiality obligations. 

 

In-house lawyers

 

Advice from in-house lawyers is only privileged in so far as they are providing legal advice -  advice on executive, business or administration matters will not be privileged.  Therefore, it is wise for in-house lawyers to avoid including communications relating to their executive, business or administrative function in the same document as communications relating to their legal function.  Confusion can lead to loss of privilege in the whole document.

It is also important to note that in EU competition law investigations, communications with in-house lawyers will not be treated as privileged, as the Court of the European Union considers that in-house lawyers are not sufficiently independent from their client employers.

 

“Privileged”

 

Labelling a communication as privileged does not determine the privileged status of a document.  However, if the privileged status of the document is ever disputed the “privileged” label may add to the argument that it is protected from disclosure.

 

 

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